Starting Your Business

Many people consider the chance to start a business as an opportunity to take control of an area of their lives in which they traditionally have had no control. The start of a business is viewed as an escape, a panacea in which one will be able to take full control of his or her life. Budding entrepreneurs think they will control when they work, how they work, and whom they will work with. For long-term business owners, many of these items and ideas are realized, but not all business owners realize these results, especially when the business is in the initial stages of development.

 

Once entrepreneurs start their companies, they encounter a number of unanticipated issues: longer hours than expected, constant financial pressures, demanding clients and vendors, additional family pressures and other unforeseen concerns. If new business owners can make the transition to experienced or seasoned business owners the rewards can be many, greater control over one's time, greater opportunities for enhanced financial rewards, and control over who are you associates and clients.

When considering the start of a new business there are a number of items that should be considered to insure that you are in the best position possible for success. This is not an all-encompassing list by any measure; however, it covers several fundamental items that can help to develop a realistic view of this undertaking.

 

1. Be Experienced in the Industry
There are many success stories of people starting companies in areas in which they had no experience. In many of those cases, those people had additional resources or connections that mitigated the lack of experience or knowledge. Most successful entrepreneurs began companies in industries in which they had experience. There will be many challenges facing you as you begin, and a firm knowledge of the industry will add the additional security that may be needed to get through the challenging periods that you will face.

 

2. Write a Business Plan
Again, there are successful entrepreneurs that started without a business plan. For most of us, a business plan is a necessary item in the formation of a business. The plan is the tool to tell your story as well as force you to think about the business. If you require outside assistance for financial resources, i.e., a bank or even friends and family, a business plan will help to lay out your thought process. The plan will let potential stakeholders know that you have an idea about running this new operation.

The plan should highlight both the strengths and weaknesses possessed by you and the business, as well as the opportunities and threats that will be encountered in the marketplace. It should also focus on the financial issues, competitive challenges, the overall marketplace, the history and future of the industry, and the impact of the local and national economy. These are just a few of the items that should be included.

 

3. Capital
Probably the biggest issue facing a new business is capital. There are many places to raise the money that will be needed to get going.  Friends and family, savings, investments, home equity, financial institutions and the SBA are several areas to consider. You must be willing and able to explain how you will repay the debt or generate a return on the prospective investor's money.

 

One of the major pitfalls of a new business is overestimating revenues and underestimating the expenses.  Once you have developed your plan, consider reducing the projected revenues by 10 percent to 50 percent with the same level of expenses to see what the effects will be. Increase the expenses by 30 to 50 percent with the same levels of revenue to see what the impact will be. Be prepared to go without a salary or with a sharply reduced salary than you are accustomed to for the first year to 18 months and perhaps longer. Reduce your personal financial commitments to the essentials and be prepared to function in that mode for several years.

 

4. Communication
Running your own business is significantly different than running someone else's business or the department of a large organization.  In those scenarios, if things get bumpy or you get tired of the rat race, you can leave and get another job.  When you get your business up and running, it's hard to just leave it or close or take some time off when the going gets tough.  You must communicate with everyone that is involved such as your spouse or partner, other family members, clients, suppliers, and creditors.

 

5. Ego
Leave your ego at the door!  You may find yourself in situations that would have never occurred to you based on your past experiences.  There may be times when you cannot deliver on time to a client or pay a vendor and need extra time.  It is very humbling to ask for additional time to pay a bill or a debt.

 

6. Be an Optimist and Persevere
Starting a business for most of us is a risky proposition.  You must be an optimistic person if you are going to succeed!  Do not confuse optimism with being naïve.  Optimism is the well from which you will dip when things are tough without an apparent positive resolution.  Optimism keeps you focused when the world seems to be crumbling around you. 

Optimism may be the sole thing that influences someone to give you that first major contract. Be optimistic, it will yield many dividends. Optimism will help you to persevere. Perseverance is a necessary trait in order to be successful. On those days when you want to curl up into the fetal position, you have to buck up!  Get out of bed, go into the office and continue to move forward, even if it is only 1/2 of an inch. You’re still going in the right direction.

 

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